November 11, 2006

 

CBOT Soy Review on Friday: Fund sales, no news pressure complex

 

 

Speculative-led selling mixed with commercial sales took Chicago Board of Trade soybean futures to three-session lows, with a lack of fresh news allowing bearish traders to control the market, sources said Friday.

 

November soybeans fell 6 1/4 cents to settle at US$6.51 1/4 and Jan lost 7 cents to US$6.62 1/2 a bushel.

 

Follow-through pressure from a Thursday's weak technical close may have ended soybeans' long rally, at least for the time being, said Anne Frick, oilseed analyst at Prudential Financial in New York.

 

The soybean market "may have seen an interim high, and I think you probably saw a little sell-off here on that idea," Frick said.

 

The inability of corn to rally on what was on the surface, at least, a bullish crop report, does not portend well for soybeans as corn has been the leader on the CBOT grain floor recently, she added.

 

January soybeans will now likely try and test the US$6.60-US$6.40 support area. If they succeed and push below US$6.40, prices could dip all the way to US$6.13, she explained.

 

January beans touched a low of US$6.60 a bushel about one hour into the session but pared losses slightly before the close.

 

Now that the mid-term elections are out of the way and the November crop production and supply/demand reports are history, the market is running into a potential news void, which may make it difficult to sustain any rally attempts, an analyst said. In fact, it may encourage additional liquidation.

 

Funds were net sellers of an estimated 2,000 soybean contracts as of 12:30 p.m. CST.

 

J.P. Morgan sold 1,500 January, Fimat sold 500 January and 200 March, Term Commodities bought and sold 400 January, while Goldenberg-Hehmeyer and Prudential Financial each sold 200 January.

 

UBS bought 700 January, O'Connor bought 500 January and ABN Amro bought a net 400 January.

 

 

SOY PRODUCTS

 

Soy product futures also declined, with only slight losses in soyoil but a larger decline in meal.

 

Fund selling was a feature in the products, as it was in soybeans, though spread trading oil/meal contracts was also a factor. Tenco was a noted spreader, selling December meal and buying December oil 2,000 times.

 

Funds were even in meal and sold a net 2,000 oil contracts by 12:30 p.m. CST.

 

The products were influenced overall, however, by the weak trade in soybeans, which kept steady pressure on prices for most of the session. December meal hit a four-session low of US$194.30 but shaved some of that loss by the closing bell. December oil hit a three-session 27.48-cents low but also trimmed losses to near unchanged levels.

 

December soymeal fell US$2.80 to settle at US$195.50 a short tonne and December soyoil lost 2 points to 27.69 cents a pound.